Britain sets out new standards for environmental reporting

FILE PHOTO: Britain's Chancellor of the Exchequer Rishi Sunak arrives at The Sun's Who Cares Wins Awards in London, Britain September 14, 2021. REUTERS/May James

LONDON (Reuters) -Asset managers, pension schemes and some large companies will need to start disclosing their environmental impact under planned new rules, Britain’s Finance Minister Rishi Sunak said on Monday.

The move forms part of a broad government effort to position itself as a climate leader ahead of global talks in Scotland starting Oct. 31, where all countries are being urged to create more ambitious climate goals.

In 2019, Britain became the first major economy to sign its commitment to reach net zero greenhouse gas emissions into law, and in 2021 it increased its climate ambition with a plan to cut emissions by 78% by 2035, compared with 1990 levels.

After announcing plans for new Sustainability Disclosure Requirements (SDR) in July, Sunak presented a report on Monday entitled “Greening Finance: A Roadmap to Sustainable Investing,” which laid out the next steps.

With plans for a range of legislative and regulatory changes to help set “world-leading standards on environmental sustainability reporting,” the report outlined more details on what the SDR would mean for companies and investors.

The SDR will aim to help investors check the degree to which their money is invested in funds and companies aligned with the world’s transition to a low-carbon economy.

The rules will aim to help stamp out “greenwashing,” or misleading claims about a company or fund’s environmental sustainability, and follows the launch of similar rules in the European Union.

Building on the Task Force on Climate-Related Financial Disclosures framework, which guides companies on what climate risk information to disclose, the SDR will see companies report in line with the UK’s planned Green Taxonomy, which will define what activities are considered as helping in the net zero shift.

Asset owners and managers will also have to disclose how they take sustainability into account and investment products will need to provide reports on their environmental impact.

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